Variations in worker compensation claims by company: the potential for achieving a significant reduction in claims

BACKGROUND: The objective of our study was to examine the potential reduction in paid worker compensation claims if the rate of claims were as low as the rates of the top companies in that industry category. METHODS: Using Michigan data for the years 1999-2001, we first excluded companies who had no paid worker compensation claims for wage replacement and then calculated the top 10th, 25th, and 50th percentile rates of paid worker compensation claims for wage replacement of all the remaining companies combined and by 2 digit SIC. The percent reduction was calculated separately for small (<20 employees) and large companies based on the differences in observed minus expected if all companies did as well as the top companies in their industry grouping. RESULTS: Fifty-nine percent of large companies and 90% of small companies had no paid worker compensation claims for wage replacement over the 3-year period. Controlling for industry type there would have been 91,504 fewer paid workers' compensation claims if all companies with at least one claim did as well as the 10th percentile or better as the companies in their industry grouping. Reductions were found across all industries and for both small and large companies. CONCLUSION: Variations in worker compensation claims between states are highlighted when legislators consider "reforms" to reduce workers' compensation costs. These reforms overlook the larger variation between companies within the same type of industry in the same state. Possible reasons for this variation between companies and its implication on reducing morbidity and health care costs are discussed.     

Occupational medicine: the case for reform

The specialty of occupational medicine is in peril, in large part because of its reliance on financing by industry, which has powerful incentives to limit costs and to favor physicians who are useful to their employers. Occupational physicians generally practice within the framework of the workers' compensation system. Serious flaws in the incentive structure of workers' compensation constrain objectivity in their practice. Under present law they are unavoidably subject to perverse influences from employers and insurance companies. A fundamental reform of workers' compensation law and practice is urgently needed to separate occupational physicians from the control of employers and workers' compensation insurers, whose interests should not be allowed to override the physicians' integrity or to compromise the specialty.     

Targeting of workplace inspections for lead.

The prevention of occupational lead poisoning requires identification of worksites with ongoing excessive lead exposures. The utility of different sources of surveillance data in identifying worksites was evaluated by comparing a list of companies inspected by the Occupational Safety and Health Administration (OSHA) for lead with 1) Ohio Bureau of Workers' Compensation (BWC) claims for lead poisoning, and 2) the New York Health Department's Heavy Metal Registry (NYHMR) reports of individuals with elevated blood lead levels. For the period 1981 through 1985, the NYHMR identified 179 companies with at least one employee having an elevated blood lead level. Of the 134 OSHA inspections conducted in New York during the same time period, 23 (17%) companies were identified by the NYHMR. In Ohio from 1979 through 1985, 50 companies had workers' compensation claims filed against them involving documented elevated blood lead levels. OSHA inspected 306 companies; 23 (7.5%) were identified by the BWC. In both states, companies inspected by OSHA were concentrated in larger industries with traditional, well-recognized lead hazards (e.g., primary metal and fabricated metals). Companies identified by compensation claims and laboratory reports tended to be in industries dominated by smaller establishments where lead is not a primary part of the industrial process (e.g., automotive repair and construction). Sources of surveillance data, such as workers' compensation claims and laboratory reports, identify worksites that tend not to be routinely inspected by OSHA and which need intervention to prevent excessive lead exposure. To maximize the impact of public health resources devoted to the elimination of occupational lead poisoning, follow-up efforts at companies identified by state health departments and workers' compensation systems offer an important opportunity to complement OSHA's inspection efforts.     

The Workers' Compensation System: Worker friend or foe?

BACKGROUND: The workers' compensation system was designed to help injured workers who have substantial medical expenses and perhaps have lost a great deal of income. This study determines both similarities and differences in how workers experience their interactions with the workers' compensation systems in Florida and Wisconsin. METHODS: Ethnographic open-ended interviews with 204 workers from Florida and 198 workers in Wisconsin were conducted. All the workers had back injuries in 1990 and were either paid workers' compensation temporary disability benefits for at least 4 weeks or received permanent disability benefits or compromise settlements. RESULTS: Some interactions with the workers' compensation system were positive. However, the majority of respondents in both states experienced their encounters with the workers' compensation system as cumbersome, frustrating, and demeaning. CONCLUSIONS: Mistrust, stigmatization, payment delays, and refusal of insurer personnel to pay benefits contribute to workers' negative experiences with the workers' compensation system. These insurer behaviors raise the costs to injured workers of workers' compensation benefits and thus may reduce the propensity of eligible workers to apply for benefits.     

New possibilities in safety performance and the control of workers' compensation costs

This article describes successful behavioral interventions that improved safety performance and reduced workers' compensation costs in two corporations. The development of a four part program that: (1) shifted the paradigm for positive performance by workers and managers, (2) strengthened the community of work, (3) managed the crises of accidents, and (4) accelerated the return of injured employees to meaningful work is presented. In the two companies, lost time accidents were reduced by 95% and 87%, and accident costs were reduced by 90% and 70%, respectively. The results are discussed in terms of the critical roles played and choices made by managers in establishing a meaningful work culture, and the ethics which guide workers' and managers' behavior in decisions related to the use and abuse of the workers' compensation system.Reebok International, Ltd.     

"Hope in another direction": compensation for work-related illness among women, 1900-1960--Part II

This article examines compensation for work-related illness among women in the first sixty years of the twentieth century. Its first part (Vol. 15, No. 1) discussed women's experience in the employers' liability system and their workers' compensation claims for poisonings. Part II in this issue examines compensation for infectious diseases, principally tuberculosis; litigation involving lung disease produced by beryllium and asbestos; and women's workers' compensation claims for illnesses involving a mental component.     

"Hope in another direction": compensation for work-related illness among women, 1900-1960--Part I

This two-part article looks at women's attempts to receive compensation for their work-related illnesses in the first sixty years of the twentieth century. Women pressed claims through narrow legal remedies in the tort and workers' compensation systems for a small part of their massive burden of work-related illnesses. Part I examines the network of women advocates around occupational disease compensation; women's experience under the employers' liability and workers' compensation systems; women's most frequently compensated illnesses under workers' compensation, dermatitis and systemic poisoning; and notable litigation episodes involving phosphorus and radium poisoning. Part II of this article, to be published in the next issue, focuses on compensation for tuberculosis, asbestosis, beryllium disease, and illnesses with a mental component.     

Occupational lead poisoning in Ohio: surveillance using workers' compensation data.

To determine the utility of workers' compensation (WC) data in a system for the surveillance of occupational lead poisoning, we reviewed workers' compensation claims for lead poisoning in Ohio. For the period 1979 through 1983, 92 (81 per cent) of the 114 claims attributed to lead met our case definition of lead poisoning. The likelihood that a company had a case of lead poisoning was strongly correlated with the number of claims against the company. Thirty companies accounted for the 92 cases; two companies accounted for 49 per cent of these. Inspection by the Occupational Safety and Health Administration (OSHA) occurred at 14 of these companies, all of which were cited for violations of the OSHA lead standard. Comparison of the Standard Industrial Classification (SIC) codes for the 14 companies inspected by OSHA with the 15 companies not inspected by OSHA revealed that OSHA inspected battery manufacturers, non-ferrous foundries, secondary smelters, and primary lead smelters, but not bridge painters, manufacturers of electronic components, mechanical power transmission equipment, pumps, and paints, nor a sheriff's office where firing range slugs were remelted to make new bullets. Neither the number of cases of lead poisoning at a company nor the size of a company was related to the likelihood of being inspected by OSHA. Claims for WC appear to be a useful adjunct to an occupational lead poisoning surveillance system; their usefulness should be compared to that of other systems such as laboratory reports of elevated blood lead levels in adults.     

Occupational heat illness in Washington State, 1995-2005

BACKGROUND: Little information exists describing the incidence of heat-related illness (HRI) among non-military working populations. An analysis of HRI cases utilizing workers' compensation data has not been previously reported. METHODS: We used both ICD-9 and ANSI Z16.2 codes with subsequent medical record review to identify accepted Washington State Fund workers' compensation claims for HRI over the 11-year time period from 1995-2005. RESULTS: There were 480 Washington workers' compensation claims for HRI during the 11-year study period. NAICS industries with the highest workers' compensation HRI average annual claims incidence rate were Fire Protection 80.8/100,000 FTE, Roofing Construction 59.0/100,000 FTE, and Highway, Bridge and Street Construction 44.8/100,000 FTE. HRI claims were associated with high outdoor ambient temperatures. Medical risk factors for HRI were present in some cases. CONCLUSIONS: HRI cases occur in employed populations. HRI rates vary by industry and are comparable to those previously published for the mining industry.     

Reducing workers' compensation costs

Employers can reduce their workers' compensation costs by encouraging internal communication and education before and after injuries occur. Comprehensive workers' compensation programs can be developed by integrating the management of employee benefits and workers' compensation claims.     

The relationship of workers' compensation to the Americans with Disabilities Act and Family and Medical Leave Act

This article examines the intersection of workers' compensation laws with the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA). Much ADA and FMLA litigation stems from work-related injuries or illnesses. Knowledge of the ADA and FMLA may help prevent workers' compensation cases from resulting in costly employment litigation. Employees who are absent from work for a work-related condition often have rights under other laws, besides workers' compensation laws, such as the ADA and FMLA. Employers need to be cognizant of this while addressing these cases. First, the goals of state workers' compensation laws and the ADA and FMLA are reviewed. Then specific issues involving the intersection of workers' compensation, ADA,and FMLA are discussed.     

Occupational disease and workers' compensation: coverage, costs, and consequences

Most of the costs of occupational disease are not covered by workers' compensation. First, the authors estimated the deaths and costs for all occupational disease in 1999, using epidemiological studies. Among the greatest contributors were job-related cancer, chronic respiratory disease, and circulatory disease. Second, the authors estimated the number of workers' compensation cases, costs, and deaths for 1999, using data from up to 16 states representing all regions of the country. Unlike the epidemiological studies that emphasized fatal diseases, the workers' compensation estimates emphasized nonfatal diseases and conditions like tendonitis and hernia. Comparisons of the epidemiological and workers' compensation estimates suggest that in 1999, workers' compensation missed roughly 46,000 to 93,000 deaths and 8 billion US dollars to 23 billion US dollars in medical costs. These deaths and costs represented substantial cost shifting from workers' compensation systems to individual workers, their families, private medical insurance, and taxpayers (through Medicare and Medicaid). Designing policies to reduce the cost shifting and its associated inefficiency will be challenging.     

Workers' compensation reform in New York State: A proposal to address medical,ergonomic, and psychological factors associated with work disability

This paper presents testimony before the New York State Assembly Joint Hearings on Workers' Compensation. The testimony first establishes the background of the speaker in relation to the problems in the workers' compensation system. A brief summary of the problem including the increased prevalence of work-related musculoskeletal disorders and their contribution to work disability, the rising costs of insurance premiums, indemnity, and medical costs, and the percentage of payroll that workers' compensation costs consume in New York State is then presented. A review of problems injured workers and health care providers face is also considered. Following this, two proposals that represent a compromise position in relation to business and labor concerns are presented. The first relates to the implementation of state mandated prevention programs to reduce the risk of injury/illness and associated disability in areas accounting for the majority of the workers' compensation injuries/illnesses—low back and upper extremity disorders. It is proposed that individual employers receive incentives in the form of premium savings based upon actual program outcomes. The second proposal relates to the establishment of mutually agreed upon standards of health care for low back and upper extremity disorders similar to what currently exists in Minnesota. The potential benefits of these plans are discussed in relation to increasing costs and human suffering associated with work-related injuries/illness and disability. This paper is presented as an example of an approach to advocacy that health care providers can take to contribute to reform in the workers' compensation systems of their own states.     

Worker's compensation litigation of the upper extremity claim

This article presents an overview of the issues presented to physicians and lawyers in evaluating, treating, litigating, and concluding an upper extremity workers' compensation claim. This analysis includes a review of the unique considerations involved in the workers' compensation patient/claimant, a general examination of workers' compensation law, and the interplay between litigation and the medical management of the patient.     

Economic consequences of workplace injuries and illnesses: lost earnings and benefit adequacy.

BACKGROUND: This is the first study based on individual data to estimate earnings lost from virtually all reported workplace injuries and illnesses in a state. METHODS: We estimated lost earnings from workplace injuries and illnesses occurring in Wisconsin in 1989-90, using workers' compensation data and 6 years of unemployment insurance wage data. We used regression techniques to estimate losses relative to a comparison group. RESULTS: The average present value of losses projected 10 years past the observed period is over $8,000 per injury. Women lose a greater proportion of their preinjury earnings than do men. Replacement of after-tax projected losses averages 64% for men and 50% for women. CONCLUSIONS: Overall, workers with compensated injuries and illnesses experienced discounted pre-tax losses projected to total over $530,000,000 (1994 dollars), with about 60% of after-tax losses replaced by workers' compensation. Generally, groups losing over eight weeks' work received workers' compensation benefits covering less than 40% of their losses.     

Workers' compensation costs: still a challenge

The workers' compensation system in the United States, comprised of independent state based and national programs for federal workers, covers approximately 127 million workers and has evolved and grown since its inception in 1911. Coverage has significantly broadened in scope to allow for the inclusion of most occupational injuries and illnesses. The cost of workers' compensation care has also increased. Some of the cost drivers have been identified,and various approaches have been taken to address medical cost containment. There is a need to balance cost control with ensuring benefit adequacy and quality of medical care. It is likely that managing workers' compensation costs will continue to be a challenge in the foreseeable future. The cost of workers' compensation care affects all stakeholders including workers, employers,providers, state workers' compensation regulators, legislatures,and insurers. A continued commitment to quality, accessibility to care, and cost containment, and being alert to emerging issues that can affect these elements, will help ensure that workers are afforded accessible, high quality, and cost-effective care.     

Work-related burns in Washington State, 1994 to 1998

This article describes an investigation of work-related burns in Washington State during 1994-1998. Workers' compensation data were used to describe the general characteristics of burn injuries, estimate industrial claims rates, and compare nonhospitalized and hospitalized burn cases. The completeness of workers' compensation data as a source for surveillance was evaluated. During 1994-1998, a total of 20,213 burn claims were accepted by the workers' compensation system. Hospitalized burn cases represented only 1.5% of burn claims but incurred 55% of the costs. In addition, workers' compensation data underestimated the frequency and rate of burns. Although workers' compensation claims rates decreased during 1994-1998, work-related burns remain a problem in Washington State. Several industries (e.g., roofing, foundries, and aluminum smelting) were identified as priorities for prevention of burn hospitalizations, which incur the greater cost and time loss.     

Workers' compensation reform

Workers' compensation reform efforts respond to the competing interests of business, labor and insurers. Early reforms expanded programs in response to inadequate benefits and coverage while in the 1980s and 1990s states responded to increasing costs by tightening fee schedules, limiting physician choice, restricting eligibility,lowering benefits, and integrating managed care into workers' compensation. Although managed care has resulted in significant medical savings, the cost of workers' compensation is again rapidly increasing in some states, where workers' compensation legislation is again at the center of debate. Increasing the use of treatment guidelines, placing limitations on use of services, developing more objective criteria for determining level of disability, and streamlining dispute resolutions have been offered as solutions. Controlling costs alone, however, cannot solve other problems of workers' compensation. Future reform efforts will need to focus not only on the costs of the system but also its inclusiveness and support of the workers and their families it was intended to protect.     

Reforming insurance to support workers' rights to compensation

The structure and regulation of the insurance system for financing workers' compensation affects the costs of workers' benefits. Using the example of Maine's insurance market restructuring in response to a crisis of the early 1990s, this commentary explores how changes in insurance regulation might better support the goals of workers' compensation. The commentary analyzes how insurance and its regulation should go beyond correct pricing of risks to questions of how to structure incentives for loss control to include workers' interests as well as the interests of employers and insurers.